Lower middle market investor Ridgewood Infrastructure is working with financial advisor TD Securities to sell its regulated water and wastewater utilities company Undine, according to two sources familiar with the situation.

The investor and its advisors this summer launched the marketed process for the asset, which was one of the early investments in the manager’s inaugural USD 600m Ridgewood Water & Strategic Infrastructure Fund, according to the first source. The process is advancing, the source added.

Ridgewood and TD Securities did not respond to requests for comment.

In an interview in May this year, Ridgewood execs told this publication that Undine has made more than 20 roll-up acquisitions since Ridgewood bought it in 2017.

Selling Undine would be Ridgewood’s third exit from that portfolio following its exits from natural gas distribution utility company SiEnergy in January of this year and the October 2024 sale of a 75% stake in the San Antonio Water Vista Ridge System to Ullico Infrastructure Fund.

In January, Ridgewood announced a USD 1.2bn final close for its second fund.

Water sector bubbling upInfrastructure investing in the US water sector has fallen from the high of 2020, when 18 deals closed worth a total of almost USD 5bn, according to Infralogic data, but this year has seen several deals announced involving infrastructure funds.

In January, Eversource Energy agreed to sell Aquarion Water Company to the Aquarion Water Authority at a USD 2.4bn enterprise value, although that deal is facing opposition from local elected officials in Connecticut.

In May, EQT announced that it had agreed to acquire Seven Seas Water from Morgan Stanley in a deal that sources said was worth north of USD 1bn.

That same month, BCI- and JP Morgan Infrastructure Investments Fund-backed Nexus Water Group agreed to sell water and wastewater systems located in eight states to American Water Works for about USD 315m.